What is operations management?
The activity of managing the resources that create and deliver services and products. (Operations functions is the part of the organization which handles this)
Operations management is one of the core functions in a business, what are the other functions?
- Marketing: interface between the market and the organization
- Product and service development: create new products and services
- Operations: responsible for the creation and the delivery
What are the supporting functions in an organization?
- Accounting and finance
- HR
- Information system
What was the case of Heathrow airport closure about?
- closed upon snowfall 19th December 2010
- due to authorities unable to to de-ice the take off and landing areas and stands where planes were parked
- had one third of the capacity (33%), shut completely for 4 days, 2 runways,1300 flights a day, 69 vehicles to keep runway clear, 28 snow ploughs
- gatwick, 1 runway with 700 flights, increased its number of vehicles from 47 to 96 and had 29 snow ploughs making it operate on 80-90 % capacity.
What consequences did Heathrow face?
- closure and disruption caused £25m loss for the British airport authorities
- BA cost £50 m
- AIR france lost £29 m
- air carriers joined in legal action against BAA
What were the causes of the Heathrow airport closure?
- equipment and procedures
- shortage of de ice staff and equipment
- inefficient use of de ice equipment due to improper communication.
What operations management activities went wrong?
- Strategic planning: no long term planning, while other airports like gatwick increased de icing capacity, Heathrow cut snow defense spend)
- Risk management: no failure preventions, same situation had occurred in previous years
- Capacity management: not enough equipment and staff
- Process design: lack of communication between BAA and airlines
What is the input transformation process?
- all operations create and deliver products and services by changing inputs into outputs using an I out transformation process.
- they all have Inputs of transforming resources, usually divided into facilities and staff
- and transformed resources which are some mixture of materials, information and customers.
- outputs are products and services that add value for customers
What is meant by the product and service mix?
- goods and products are tangible things that people or organizations use
- services are intangible items that are consumer that the time of provision
- nothing is 100% a product or 100% a service, hey are a mixture of both.
- ex: meal in a restaurant
Distinguish between pure goods and pure services?
Pure goods:
- tangible
- can be stored
- production precedes consumption
- low customer contact
- can be transported
- quality is evident
Pure services:
- intangible
- cannot be stored
- production and consumption are simultaneous
- high customer contact
- cannot be transported
- quality is difficult to judge
What are the 4 V’s?
- Volume: the sales volume. High volume processes can exploit economies of scale and can be systemized
- Variety: the range of products and services that are produced by the processes. High variety process require flexibility
- Variation: the variable in the demand placed on the process. High variable processes need to be able to change their output level
- Visibility: high visible processes add value whilst the customer is present
Does volume matter? What is its respective implications? (Low/high)
Low volume:
- low repetition
- each staff member performs more of each task
- less systemization
- high unit costs
- ex: posh restaurant
High volume: - high repeatability - specialization - capital intensive - low unit costs Ex: fast food chain
Does variety matter? What is its respective implications? (High/low)
High variety:
- flexible
- complex
- match customer needs
- high unit costs
Low variety: - well defined - routine - standardized - regular - low unit costs Ex: buss
Does variation in demand matter? What is its respective implications? (High/low)
High variation: - changing capacity - anticipation - flexibility - in touch with demand - high unit costs Ex; travelodge
Low variation: - stable - routine -predictable - high utilization - low unit costs Ex; resorts/vacation
Does visibility matter? What is its respective implications? (High/low)
High visibility:
- short waiting tolerance
- satisfaction governed by customer perception
- customer contact skills needed
- received variety is high
- high unit costs
Low visibility: - time lag between production and consumption - standardization - low contact skills - high staff utilization - centralization -low unit costs Ex; Amazon delivery
Which of 4vs are high costs and which are low costs?
Low costs:
- high volume
- low variety
- low visibility
- low variation
High costs:
- low volume
- high variety
- high variation
- high visibility
Why is operations management important in all types of organizations?
- it uses the organizations resources to create outputs that fulfill defined market requirements. This is the fundamental activity
- It is increasingly important because today’s business environment requires new thinking from operations managers
What are the changes in the business environment which are shaping operations management?
- Increased in cost based competition
- Higher quality expectations
- Demands for better services
- Rapidly developing technologies
How are these business environment changes prompting operations responses?
- Globalization of operating networking
- Information based technologies
- Co-creation if services
- Supply chain management
What is the process hierarchy?
- all operations are part of a larger supply network which, through the individual contributions of each operation, satisfies end customer requirements
- all operations are made up of end processes that form a network of internal customer supplier relationships within the operation
What do operations managers do?(4 D’s)
- Direct: understanding relevant performance objectives and setting a strategy
- design: design of operation and its processes and services and products
- deliver:the planning and controlling of the activities of the operation
- develop: improvement of operations over time
Distinguish between operations management in small organizations and NGO’s?
Small businesses:
- smaller amount of resources so people may have to do different jobs as need arises
- allows to respond quickly when problems arise and opportunities
- difficult to separate issues from the mass of others in the org
NGO’s:
- strategic objectives are more complex and involve mixture of political, economic, social or environmental objectives, more conflicting matters
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Introduction22
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Operations Performance And Strategy21
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Process Design17
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Layout And Flow13
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People, Jobs And Organisations26
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The Nature Of Planning And Control22
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Capacity Planning And Control14
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Supply chain management and enterprise resource planning34
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Lean Synchronisation and JIT10
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Quality management13
